From Free Phones to Free
Taxis, BYD and China Development Bank Offer Break-Through Financing on
Electrified Public Transportation

November 08, 2012 05:53 PM Eastern Time

BEIJING--(BUSINESS WIRE)--You may have missed it; a break-through announcement on November 4th
out of Beijing China – yes, the very manufacturer that made it possible
for global cell phone carriers to offer FREE mobile phones with a
service contract (commoditizing the cell phone industry). BYD
has now launched a program that essentially makes electric taxis and
buses FREE in China – Yes, free in the same way cell phones are free. BYD
and China
Development Bank will facilitate the rapid adoption of electric
vehicles by Chinese municipalities with the introduction of their “Zero
Down, Zero Effective Cost, Zero Emissions” program aimed at the
Chinese taxi and bus market. They have challenged fleet managers to
re-look at monthly operational savings as a way to reduce and spread out
the price difference of up-front costs associated with new electric
vehicle purchases across several years. The financial project
administrated by the China Development Bank and others now total
over 30 Billion RMB (~$4.6B USD) in credit and will allow buyers to
finance 100% of the purchase price with no money down, paying a lease
rate thateffectively costs LESS than regular monthly operational
expenses (see the accompanying charts). This chart displays the “effective
cost” when driving the BYD
5-passenger, e6 Taxi. If the vehicle is driven enough, the vehicle
payment will be entirely offset; making the effective cost of the lease Zero
(now driving EVs are not only environmentally friendly with zero direct
emissions, but the savings are greater than the
monthly payment)!

“Zero
Down, Zero Effective Cost, Zero Emissions”

BYD e6 MONTHLY PAYMENT

$550

EFFECTIVE PAYMENT CHART*

Miles

DAYS DRIVEN

NOTE: Bold numbers are savings beyond payment (car is free)

per Day

1

7

14

21

25

28

29

30

31

1

($550

)

($549

)

($549

)

($548

)

($548

)

($548

)

($548

)

($547

)

($547

)

31

($546

)

($520

)

($491

)

($461

)

($445

)

($432

)

($428

)

($423

)

($419

)

63

($542

)

($491

)

($432

)

($373

)

($339

)

($314

)

($305

)

($297

)

($288

)

94

($537

)

($461

)

($373

)

($284

)

($234

)

($196

)

($183

)

($170

)

($158

)

125

($533

)

($432

)

($314

)

($196

)

($128

)

($78

)

($61

)

($44

)

($27

)

156

($529

)

($402

)

($255

)

($107

)

($23

)

$41

$62

$83

$104

188

($525

)

($373

)

($196

)

($18

)

$83

$159

$184

$209

$235

219

($520

)

($343

)

($137

)

$70

$188

$277

$306

$336

$365

250

($516

)

($314

)

($78

)

$159

$294

$395

$429

$462

$496

281

($512

)

($284

)

($18

)

$247

$399

$513

$551

$589

$627

* EV savings delta assumes $.10/KWh electricity,
$4.50/gallon

China’s concerns about economic recovery coupled with environmental
pollution, and rapidly rising fuel costs have led to a social consensus
about the national imperative to develop electrified transportation
platforms. China’s public fleets now have over 500,000 bus rapid
transits and over 1.2 million taxis which may only constitute 1.7% of
the total number of motor vehicles, HOWEVER, they constitute 27% of fuel
consumption and total vehicle emissions! There is an urgent need for
cleaner public transportation solutions; however, the initial costs of
purchasing clean-energy vehicles have long been cost prohibitive. As a
leader in new clean energy vehicles, BYD has successfully
launched commercial operations of scale in locations such as Shenzhen,
Xi'an, Baoji, Shaoguan, the Netherlands,
Singapore, the United
States, Columbia,
Denmark, Germany and London
in the U.K. A fleet
of 300± BYD e6 pure electric taxis have been operating in Shenzhen
for two years and have logged over 26 million kilometres (~16 million
miles). Miles logged by a single taxi is approaching 240,000 kilometres
(~149,000 miles), equivalent to more than 10 years of service mileage
for a normal private-party car. Similarly, the 200
pure electric BYD eBuses operating in Shenzhen have an accumulated
mileage of over 10.5 million kilometres (~6.5 million miles). Augmenting
this solid fleet experience, BYD has now announced cooperation with
several local enterprises in Tianjin and Yunnan
as well as other cities globally to manufacture and promote electric
public transportation and to speed EV adoption and acceptance. The “Zero
Down, Zero Effective Cost, Zero Emissions” initiative removes the
financial barriers, speeding the electrification of public
transportation fleets.

“Zero Down” literally means that customers will not need to pay
the purchase price of the vehicle or a down payment at time of vehicle
delivery – customers only pay the monthly instalments. Because the price
of electricity is so much lower than that of petroleum, the cost savings
from monthly taxi usage far outweigh the electric vehicle monthly fees.
In Shenzhen for example, the BYD e6 taxi (after subtracting the 60,000
RMB or ~$9300 USD government subsidy and 60,000 RMB ~$9300 USD local
subsidy) costs about 180,000 RMB (~$28,000 USD). A Shenzhen taxi travels
an average of 450 Km per day (~280 miles) and operates 353 days a year
(taxis average one day downtime per month due to service). It is
estimated that the average fuel a taxi consumes is about 9 litres of
petrol per 100km (~26 mpg), and the price of petrol is 8 RMB per litre
(~$4.50/gal). The e6 pure electric taxi consumes 26 KWh per 100km (EPA:
3.8 KWh/ mile or 88.5 mpge), and the average price of electricity is
0.66 RMB (~ $0.10/ KWh); so each electric taxi
saves 247 RMB (~$38 USD) per day, or 7166 RMB (~$1103 USD) per
month….BUT the BYD e6 5-year-lease rate in Shenzhen is only 3576 RMB
(~$550 USD) per month! Customers are cash-flow positive (with 3590 RMB
extra in the bank) from the first month they lease a car with “Zero
Effective Cost”! If the taxi runs for 5 years, the total savings is
326,400 RMB (~$50,215 USD) – this is pure profit.

Project

Gasoline Taxi

BYD e6 Electric Taxi

ROI compared to Gas

Operating Expense

563,760 RMB

133,803 RMB

429,957 RMB

over 5 years

($86,732 USD)

($20,585 USD)

($66,147 USD)

Price of Vehicle

100,000 RMB

180,000 RMB

-80,000 RMB

($15,385 USD)

($27,692 USD) after subsidy

(-$12,308 USD)

Purchase Tax

8,547 RMB

15,385 RMB

-6,838 RMB

($1315 USD)

($2367 USD)

(-$1052 USD)

Interest Incurred

0

16,673 RMB

-16,673 RMB

($2565 USD)

(-$2565 USD)

Savings in 5 years

326,447 RMB (~$50K)

This green vehicle initiative not only provides significant operational
savings and economic recovery for public transport and taxi companies,
but also brings a substantial social value. The “Zero emissions”
and zero direct city pollution can be very significant. An e6 electric
taxi saves 14,120 litres (~3816 gal) of fuel per year, with 32 tonnes
fewer CO2 emissions even when offsetting the 80% Chinese coal-electric
generation contribution. If 1.2 million taxis in China were all replaced
by pure electric vehicles, in one year, 169 million litres (45 million
gal) of fuel could be saved, and CO2 emissions could be reduced by 38.62
million tonnes! This number only goes up as China transitions more and
more to green electric generation sources (with Hydro, Geo, Wind and
Solar generation). To support the scaling up of electric vehicle use,
BYD will partner with electricity grid companies to develop the needed
infrastructure, distributed-smart energy storage and provide planning
and technical support for the development of charging stations. Analysts
are now saying: “pure electric vehicles as the mainstay of public
transportation are finally coming to fruition in China. With this new
break-through financing which clearly demonstrates the substantial
economic value and social benefits, new energy vehicles can achieve
mass-adoption in a relatively short period of time.” Readers should take
note: In 2000, when US carriers began offering the first “free-phone”
offers, cell-phone penetration in the US was only 10%. In only seven (7)
years time, with lower-competitive, cell-phone prices (thank you BYD)
and this wide-spread new financing model for “free phones” in place,
penetration raced to 98%! History is about to repeat itself!

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